Bestway snaps up £200m Sainsbury stake

Shares of Sainsbury’s soared after family-owned Bestway acquired a large share of the grocer.

The UK’s second largest supermarket said Costcutter’s owner had bought a 3.45 per cent stake, worth around £200 million.

Shares of Sainsbury’s rose 5.5 percent, or 13.1 pence, to 252.5 pence as the investment sparked talk of a possible takeover.

But Bestway said it does not intend to bid for the supermarket chain, founded in 1869 by John James and Mary Ann Sainsbury.

The wholesaler said it held the shares “for investment purposes” and wanted to support Sainsbury’s bosses.

Bestway added that it will consider building a larger stake in the FTSE 100 company in the future. Sainsbury’s ownership has been speculated for some time and in 2021 there were even reports that it could be acquired by US private equity giant Apollo.

Bestway Group is the seventh largest family business in the UK with a turnover of approximately £4.5 billion.

It was founded in 1963 as a convenience store chain in London by Pakistani entrepreneur Anwar Pervez and has since grown to wholesale food, drink, cigarettes and household items to 130,000 retailers.

The company has 28,000 employees, thousands of them in the UK, and an annual profit of around £400 million. In addition to wholesale, Bestway owns the UK’s third largest pharmacy chain, Well Pharmacy, and more than 2,700 convenience stores under the Costcutter and Best-one brands.

AJ Bell investment director Russ Mold said the purchase came “out of the blue” and that a combination of the two companies makes sense.

He highlighted how Tesco prospered after acquiring Bookers – the country’s largest wholesaler – in 2017 for £3.7bn.

Mold said: ‘As the UK’s largest independent cash-and-carry company, Bestway’s strategy should be seen as a place where retailers, caterers and cafes can obtain all the necessary stock at a good price.

“If Sainsbury’s were part of the same group, both sides could benefit. In theory, Bestway could tap into the purchasing power of the supermarket and get inventory at a lower price, making its offerings more attractive to its customers.”

But he warned that any attempt to make a full offer would be tricky as Bestway would have to make a ‘convincing’ offer to Sainsbury’s existing major shareholders.

They include the Qatari Investment Authority with a 14.3 percent stake and the secretive so-called “Czech Sphinx” Daniel Kretinsky, whose Vesa Equity Investment vehicle owns a tenth of the supermarket.

Sainsbury’s said in a statement last night that it would “cooperate with Bestway Group in accordance with our normal interactions with shareholders.”